Welcome to the latest issue of the KHQ Super Alert. Among the key developments, ASIC gave its views on the impact of the retirement income covenant on the superannuation industry one year on, and also published its 2024 enforcement priorities. APRA revised Prudential Standard SPS 510 on Governance given the overlap with CPS 511, and an interesting Federal Court judgement on a super account rollover involving a scammer was handed down.
Federal Court – Judgement in relation to trustee processes for rollovers
On 23 November 2023, the Federal Court handed down its judgement in Braz v Host-Plus Pty Ltd [2023] FCA 1454. In this case, the member had been the subject of a scam when a scammer had fraudulently transferred money out of a member’s account. The member complained to AFCA that the trustee should not have processed the rollover. AFCA considered many issues as part of its determination including whether the trustee’s ‘conduct satisfied its transfer obligations and complied with process checks and administrative controls which were in place’. AFCA determined that the trustee ‘acted in a manner consistent with its legislative obligations’ and accordingly its decision to process the rollover was fair and reasonable in the circumstances.
The member appealed the AFCA determination on the basis that the trustee’s payment processes were inadequate. The Court allowed the appeal and determined to set aside AFCA’s determination. The matter has been remitted to AFCA for re-determination.
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ASIC – Annual Forum discussion on retirement income covenant
On 22 November 2023, ASIC published an article from its Annual Forum 2023 on the retirement income covenant’s impact on the superannuation industry one year after its introduction.
ASIC stated that ‘[p]rotecting consumers as they plan and make decisions for retirement is a strategic priority for ASIC. However, a year after the introduction of the covenant, ASIC and [APRA] conducted a joint review which found that more progress was needed to implement it.’
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ASIC – 2024 enforcement priorities
On 21 November 2023, ASIC issued a media release announcing its 2024 enforcement priorities.
Among other things, it states that ‘two new priorities have been added in relation to the superannuation industry, including a focus on member services failures and misconduct relating to the erosion of superannuation balances’.
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Government – Streamlining financial reporting architecture
On 21 November 2023, the Treasurer the Hon Jim Chalmers MP issued a media release announcing that ‘the Australian Accounting Standards Board (AASB), the Auditing and Assurance Standards Board and the Financial Reporting Council – will be combined into a single entity’.
It is intended that restructuring the nation’s financial reporting bodies will ‘make them more efficient, effective and fit for purpose, including to assist Australia in implementing new climate and sustainability standards’.
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APRA – Quarterly superannuation statistics released and default insurance data
On 21 November 2023, APRA published the latest quarterly superannuation statistics for the period up to 30 September 2023.
Total superannuation assets are sitting at $3.5 trillion and APRA has explained that this figure ‘declined over the September 2023 quarter due to an increase in member benefit payments and negative investment returns in the quarter’.
On the same day, APRA also released additional data relating to default insurance information that was published as part of its quarterly superannuation product statistics on 30 June 2023 (see our Super Alert of 7 July 2023).
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Government – Industry to fund additional financial counselling services
On 21 November 2023, the Ministers for the Department of Social Services announced that the government is ‘partnering with industry stakeholders and the financial counselling sector to implement an innovative industry funding model to ensure increased access to financial counselling services for Australians’.
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Legislation – Revised SPS 510 Governance
On 20 November 2023, Prudential Standard SPS 510 Governance was revoked and replaced with an updated version with effect on 1 January 2024.
This update has become necessary as a result of CPS 511 commencing with staggered effect on 1 January 2023. According to the Explanatory Statement ‘a number of existing requirements relating to remuneration, including those detailing requirements in relation to Board Remuneration Committees and Remuneration policies, currently set out in SPS 510, have become progressively redundant as these matters are covered by new requirements in CPS 511.’
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Parliament – Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 passed
On 16 November 2023, the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 passed both Houses of Parliament. According to the Explanatory Memorandum, the Bill proposes to (among other things) make technical amendments to the Corporations Act 2001 (Cth) to allow:
- ‘ASIC to approve applications from multiple licensees to register on the Financial Advisers Register the same relevant provider’; and
- ‘assisted decision-making to be used for any purpose for which ASIC may make decisions in the performance or exercise of ASIC’s functions or powers to register a relevant provider’ (assisted decision-making allows ASIC to use various computer applications in the decision process).
See our Super Alert of 17 February 2023 for further details. Amendments were made to the Bill by the Senate before it was passed, however none of them affected the above two matters.
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Parliament – Attorney-General’s Portfolio Miscellaneous Measures Bill 2023 introduced
On 15 November 2023, the Attorney-General’s Portfolio Miscellaneous Measures Bill 2023 was introduced into the House of Representatives.
Among other things, the purpose of the Bill is to ‘confer jurisdiction on the Federal Court of Australia … to hear and determine a range of summary and indictable offences relating to conduct within the regulatory remit of [ASIC].’
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